Who wins if Iliad buys T-Mobile?

French carrier Iliad's surprise unsolicited bid for T-Mobile US may be good news for everyone but Sprint.

Iliad confirmed on Wednesday it has offered to buy a majority stake in the fourth-largest U.S. mobile operator in a deal that values the company at about US$30 billion. The news followed months of reports about an impending takeover deal with Sprint, the third-largest carrier, that's never quite materialized.

The Iliad bid may have been unexpected, but it's not likely to be unwelcome. U.S. regulators will see a potential deal that changes the ownership of T-Mobile without affecting the makeup of the domestic mobile market. Consumers would be looking at a scrappy U.S. carrier now owned by a French company that's specialized in undercutting bigger rivals in its own market. And Deutsche Telekom, the majority owners of T-Mobile, may have a bidding war on its hands.

As simply one foreign owner looking to buy out another, Iliad would face dramatically less government scrutiny than Sprint would as a domestic player asking to further consolidate the market, said analyst Roger Entner of Recon Analytics. If Sprint bought T-Mobile, the U.S. would lose one of the four competitors that now vie for customers, a prospect that some regulators have said they wouldn't welcome. An Iliad buyout would preserve the four-carrier market.

"It would probably be very easy to approve," Entner said. The only condition he sees in such a deal would be including someone on T-Mobile's board who's been approved by U.S. agencies, to safeguard national security, as was required when Japan's SoftBank bought Sprint last year.

Four competitors, especially with an underdog as aggressive as T-Mobile has been under CEO John Legere, could continue the battle for consumers that has led to several new types of plans and price points across the U.S. mobile industry over the past couple of years. Iliad is known for the same kind of disruption in French telecommunications, Entner said.

Deutsche Telekom, which has been looking to cash out of the U.S. for years now, may benefit most of all from the entry of a rival bidder.

The prospect of going up against a proposal with a much easier path to approval won't scare off SoftBank Chairman and CEO Masayoshi Son, who controls Sprint, Entner said. "Masa-san is not a guy who gives up. He's tenacious. He's pugnacious," he said.

Iliad said nothing about the status of its dealings with T-Mobile, only that it's presented the offer to the board. But assuming that Sprint's still trying to seal a deal with Deutsche Telekom as this goes on, the conversations may be about to change.

"The bargaining position of T-Mobile has become much, much stronger," Entner said.

Iliad's purchase price is in the same territory as what Sprint is likely to offer, both being around the low $30 billion range, Entner said. Those numbers actually might not change much, but based on the greater risk in a Sprint deal, T-Mobile could command a much bigger breakup fee in case the government nixes the buyout. All indications are that T-Mobile has been looking to collect about $2 billion from Sprint if things go awry, but that could easily double with a less risky option like Iliad's on the table, Entner said.

Though a $4 billion breakup fee may not sound like much compared to a $30 billion buyout, it was just such a payout that helped put T-Mobile where it is today. AT&T gave T-Mobile $3 billion cash, a seven-year roaming deal and a bundle of spectrum licenses after the U.S. Federal Communications Commission and Justice Department blocked its attempt to buy the smaller carrier in 2011. That windfall contributed to T-Mobile's rollout of LTE.

"T-Mobile financed its network buildout through the spectrum and the money it got from AT&T," Entner said. That LTE expansion was key to making the underdog more credible against its larger rivals, paving the way for the successful challenges it's mounted since then.

On Thursday, T-Mobile reported a net gain of more than 1 million customers for the fifth quarter in a row, just a day after Sprint reported losing another 220,000 subscribers. Another consolation prize might make T-Mobile stronger yet again.

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